Amazon Says New Loan Program Helps Small Businesses Turned Down by Banks

Credit unions may have another competitor on the commercial loan front as online retail giant Amazon.com Inc. starts to make high-stake moves within the business lending space.

The Seattle-based company said it rolled out its Amazon Lending program through Amazon Capital Services Inc.at the end of 2011 to serve sellers of all sizes, the Wall Street Journal recently reported.

According to merchants involved with the program, the loans range from $1,000 to $38,000 and have interest rates between 1% to 13.9%, the publication reported. The company is also apparently offering small business credit card interest rates that range from 13% to 19%.

Amazon has not responded to several requests for comment from Credit Union Times.

An Amazon spokesman told the Wall Street Journal that its goal is to solve a difficult problem for sellers – helping them to obtain more cash more quickly than they might from a bank or other traditional lender.

While it has been reported that Amazon’s lending program is targeted at high-volume merchants, the company’s spokesman told the Wall Street Journal that one of its goal is to serve sellers of all sizes. Third-party sellers located outside of the U.S. may be another consideration, he added.

Biz2Credit in New York links small businesses with financial institutions that are in need of financing.

Meanwhile, with online-based businesses being the fastest-growing sector receiving loans these days, credit unions and micro lenders would likely be more willing to provide loans to the sector than banks would, Arora said.